Q Ought to I discover fairness launch when my two-year fixed-rate deal (on my 15-year compensation mortgage) involves an finish? I’m 60 subsequent yr and intend to work till I’m 67. I’ve various respectable native authority and personal pensions, and likewise £40,000 in further voluntary contributions, which ought to cowl any mortgage fee after retirement.
My property in the marketplace would fetch about £300,000, and my excellent mortgage is £150,000 (however in all probability £130,000 when the mounted fee expires). I purchased final yr on the peak of the market.
I’ve no youngsters and no person that I need to depart the property to after my demise. So I’ve little ambition to repay the mortgage (though I might use the AVCs in the direction of it).
What’s necessary to me is low month-to-month funds. Ought to I have a look at fairness launch, or am I too younger?
SK
A No, you aren’t too younger to contemplate fairness launch, because the minimal age is usually 55, however you might be too younger to have the ability to elevate the £130,000 you have to to clear your present mortgage. At 60, the utmost fairness you possibly can launch is 39.2% of the worth of your property, in accordance with Andy Vickery, a professional fairness launch and mortgage adviser at Cash Launch who specialises in over-55s finance – which signifies that essentially the most you possibly can elevate is £117,600. If you happen to wait till you might be 62, essentially the most you could possibly launch could be a barely increased £123,900.
The primary benefit of fairness launch for you is that, fairly than low month-to-month funds you’d have zero month-to-month funds. It’s because the curiosity charged on the mortgage is added to the quantity you initially borrowed, so the quantity you owe rises annually, as does the curiosity charged. As you don’t need to depart your property to anyone, this isn’t actually the issue it may be to somebody who desires their heirs to inherit as a lot of a property’s worth as potential.
